Autumn winds rise, and curing gets underway. Following the usual pattern, once late autumn arrives, many parts of southern China begin making sausages and curing pork. Orders at slaughterhouses increase, and the price of carcass pork strengthens accordingly. The fourth quarter should be the traditional peak season with the brightest prospects of the year. But this year’s market trend has completely upended everyone’s expectations.
In the third quarter, carcass pork prices weakened steadily, with the midpoint falling to around 13.8 yuan. Expectations for the peak season have yet to materialize. Institutional monitoring and forecasts indicate that even as demand for cured products gradually emerges, the average price of carcass pork in the fourth quarter will still face downward pressure. The market is most likely to see weak fluctuations and small rebounds, with no major rally. It is now clear that the peak season will not be strong, Sina Finance.
In previous years, the curing season was a key driver of rising meat prices. Why has it failed to have the same effect this year? The core issue remains a mismatch between supply and demand.
Persistent pressure on the supply side is the main factor weighing down the market. Although the industry’s sow herd has entered a sustained destocking phase, improved efficiency in large-scale farming and a continued rise in PSY have offset the reduction in supply resulting from the declining sow inventory. Supply of market-ready hogs remains ample. In addition, hogs from earlier secondary fattening and large hogs held back for sale are being marketed in concentrated volumes in the fourth quarter, coinciding with the curing season and adding to market supply. As soon as prices show even a slight uptick, concentrated sales quickly cap the gains.
In addition, high frozen-product inventories constantly act as a “ceiling” on prices. Cold-storage facilities have ample frozen pork stocks. If fresh-pork prices rise even slightly, traders and slaughtering companies will choose to release stocks to arbitrage the price difference. Frozen and fresh products compete side by side, limiting the scope for a rebound in pork carcass prices and making a sustained rally difficult.
Changes on the demand side should also not be overlooked. On the one hand, demand for traditional home-cured meat has declined year after year as consumption habits continue to change, and the share of consumption accounted for by high-salt cured meat has fallen. Beef, mutton, poultry and seafood continue to divert consumption away from pork, whose share of consumption has been on a long-term downward trend. On the other hand, the Spring Festival falls relatively late this year, extending the pre-holiday stocking period and spreading out demand. It is difficult to see the concentrated buying and short-term surge in orders of previous years. The curing season brings only a modest, temporary increase in demand, insufficient to reverse the broader pattern of supply exceeding demand.
In terms of market movements, the fourth quarter will most likely see divergent trends: during the peak curing season, there may be a brief recovery from low levels, with slight increases in some regions, but the highs will be limited. After the concentrated curing period passes, renewed pressure from concentrated hog sales may cause prices to fall again. The quarterly average price is likely to continue shifting lower, making it difficult to exceed market expectations.
In the current market environment, different participants across the industry chain face different challenges.
Farmers:With peak-season gains failing to materialize and pressure from farming losses persisting, avoid blindly holding livestock in the hope of better prices. The arbitrage margin for secondary fattening has narrowed, and risks have risen significantly. It is advisable to schedule sales in line with market conditions and your own financial situation rather than bet on a one-way surge in prices. Remain cautious about restocking, and do not let a small short-term rebound sway your sentiment.
Slaughterhouses and traders:Procure mainly against orders and avoid stockpiling. With frozen-product inventories at high levels, chasing rising prices to buy carries elevated risk. Pay close attention to actual sales of cured and preserved products in consumer markets, adjust inventory flexibly, and prioritize rapid turnover.
Cured meat processors:Current carcass pork prices are at a low level, making raw material costs favorable. This is a window of opportunity to secure raw materials and schedule production, but also be mindful of modest short-term fluctuations, sign procurement orders prudently, and control costs.
There is an old saying in the market: in peak season, look at the upside; in the off-season, look at the floor.
This year's curing season has taught the entire industry a lesson: traditional seasonal patterns are gradually weakening, and the era of relying solely on seasonal market movements is over. The effects of capacity reduction take time to filter through, and a cyclical reversal still needs time to be confirmed. In the short term, the market's main trend remains bottoming out amid volatility.
Next, keep a close eye on two signals: first, the pace at which large hogs and pigs raised in secondary breeding are cleared; second, the actual volume of southern China's cured meat shipments and the pace of frozen product inventory releases. These two indicators will determine how long the rebound in white pork prices lasts in the fourth quarter.
There will be no sudden surge, only a cycle of gradual bottoming out. In this industry, staying rational and managing risk are more important than hoping for a market rally.